UPDATE 1-EU watchdog backs proposal to withdraw Malta's Pilatus Bank licence

The Maltese financial regulator's decision to recommend the withdrawal of the banking license of Pilatus Bank due to the indictment of its chairman for money laundering was "an appropriate step," the European Banking Authority said.

EBA's move puts pressure on the European Central Bank which is expected to make a decision on whether to withdraw Pilatus's license as early as this week.

In a letter, dated Sept. 24 and sent to EU lawmakers, EBA chairman Andrea Enria said the move by the Maltese Financial Services Authority was justified by "the current circumstances of the bank's ultimate beneficial owner," Ali Sadr Hashemi Nejad. He was indicted in the United States in March for bank fraud, money laundering and the evasion of U.S. sanctions against Iran.

The MFSA had recommended the withdrawal of Pilatus' licence in June after the arrest of Ali Sadr in the United States.